WDO.TO · 2017-02-22 12:00:00

Wesdome Announces Fourth Quarter and Full Year 2016 Financial Results and Reserve and Resource Update

Resource Estimates Financials

PRESS

RELEASE

FEBRUARY 22 2017

TSX:WDO

WESDOME ANNOUNCES FOURTH QUARTER AND FULL YEAR 2016

FINANCIAL RESULTS AND RESERVE AND RESOURCE UPDATE

Toronto, Ontario – February 22, 2017 – Wesdome Gold Mines Ltd. (TSX: WDO) (“Wesdome”

or “The Company”) today announces fourth quarter (Q4) and full year financial results for the year

ended December 31, 2016. All figures are stated in Canadian dollars unless otherwise noted.

2016 SUMMARY:

 Gold production of 47,737 ounces, (2015: 50,470) in line with the Company’s revised guidance of

45,000 – 50,000 ounces

o Eagle River Mine underground production of 40,252 ounces (2015: 41,013) at a head

grade of 7.9 grams per tonne (“g/t”) (2015: 7.8) with a mill recovery of 93.5% (2015:

94.9%)

o Mishi Open Pit mine production of 7,485 ounces (2015: 9,457) at a head grade of 2.0 g/t

(2015: 2.6) with a mill recovery of 85.4% (2015: 87.3%)

 Total mill throughput of 309,035 tonnes averagin g 844 tonnes per calendar day comparable to

the previous year of 836 tonnes per calendar day

 The Eagle River Complex rebounded from an un usually poor Q1 2016 to post respectable 2016

results. The mine sequence is now better balanced to avoid a recurrence going forward

 Eagle River Complex revenue of $81.6 million (2015: $73.5 million) on gold sales of 48,680 ounces

(2015: 49,804) at an average realized price of $1,676 or US$1,265 per ounce (2015: $1,475 or US

$1,153)

 Mine operating profit1 of $26 million (2015: $17.7 million) in creased compared to the previous

year due to higher realized gold price despite a slight reduction in production and sales

 Net income of $7.8 million (2015: loss of $(4.7) million), or $0. 06 per share (2015: $(0.04)). The

2015 year includes $5.2 millio n Kiena Complex deco mmissioning costs wh ich were recorded

directly on the income statement

 Operating cash flow of $19.9 mil lion (2015: $10.0 million), or $0.16 1 per share (2015: $0.09)

increased due to higher realized gold price, $2.5 million revenue from gold derived from the

Kiena Complex mill cleanup and $2.6 million refund of prior years’ exploration credits

 Free cash flow 1 of $(8.4) million (2015: $(5.7) million) , or $(0.07) per share (2015: $(0.05)). The

increased outflow in 2016 is due to increased exploration and capital expenditures as the

Company increased its exploration efforts and invested in equipment and infrastructure at the

Eagle River Complex

 Production cash costs per ounce 1 were $1,194 or US$901 (20 15: $1,115 or US$872). The 7%

increase in unit cost is due to 5% decrease in gold production, stockpiling of low grade Mishi ore

which was written down to net realizable value; increases in underground equipment

maintenance costs, utility costs, and development metres

 All-in sustaining costs per ounce (“AISC”) 1 on a production basis of $1,707 or US$1,289 (2015:

$1,542 or US$1,206), an increa se of 11% over 2015 due to necessary expenditures on

underground drilling, development, and equipment

 Cash and cash equivalents of $26.8 million, 1,234 ounces gold in inventory at market price of

$1.9 million and working capital of $15.6 million as at December 31, 2016

2016 EXPLORATION AND CORPORATE DEVELOPMENT HIGHLIGHTS:

 Eagle River surface drilling of the north portion of the mine diorite target returns promising

results of the 7 Zone along strike

 Eagle River underground drilling extends No. 7 Zone up plunge and enhances potential of the

300E Zone, now 200 metres up plunge

 Surface drilling discovers new zone 1.7 km west of Mishi open pit mining operations

 Kiena Deep drilling launched in Q2 2016 intercepts high grades which are substantially higher

than the historic production grade profile of 4.5 g/t. Drilling results support the presence of

multiple zones of mineralization that remain open to depth and along strike.

 In 2016, The Company spent $10 million on explor ation for 104,000 metres of drilling (2015: $1

million, 21,000 metres).

 Mineral reserves net of 2016 production increased for the fourth consecutive year. Proven and

probable reserves at Eagle River was 344,000 oun ces (2015: 300,000 ounces) as at December 31,

2016 – a 15% increase from the prior year. Mish i pit reserves were lowered to 102,000 ounces

(2015: 131,000) after mining and reconfiguring the west pit. Total reserves for the Eagle River

Complex was 446,000 ounces as at December 31, 2016 (2015: 431,000).

 Equity financing for net proceeds of $16 million in Q2 2016

 Sale of non-core Kiena Complex assets for proceeds of $7 million in Q2 2016

 Acquisition of the Coldstream and Hamelin properties in Q2 2016 followed by Moss

Lake/Coldstream Fall/Winter exploration prog ram launched with goal of demonstrating

potential to double the footprint of mineralization

 Duncan Middlemiss appointed President and CEO on August 15, 2016

FOURTH QUARTER SUMMARY:

 Gold production of 11,887 ounces (Q4 2015: 13,570)

o Eagle River Mine underground production of 10,595 ounces (Q4 2015: 11,625) at a head

grade of 8.2 g/t (Q4 2015: 9.2) with mill recovery of 94.6% (Q4 2015: 94.2%)

o Mishi Open Pit mine production of 1,292 ounces (Q4 2015: 1,945) at a head grade of 1.6

g/t (Q4 2105: 2.3 g/t) with mill recovery of 81.6% (Q4 2015: 79.6%)

 Total mill throughput of 73,321 tonnes (Q4 2015 : 75,285) averaging 797 tonnes (Q4 2015: 818)

per calendar day declined slightly from Q4 2015 due to maintenance requirements on conveyors

and dry stacker

 Eagle River revenue of $22.2 million (Q4 2015: $23.6 million) on gold sales of 13,490 ounces (Q4

2015: 16,023) at an average realized price of $1,655 or US$1,240 per ounce (Q4 2015: $1,474 or

US$1,104)

 Mine operating profit1 of $7.1 million (Q4 2015: $7.8 million)

 Net income of $2.4 million (Q4 2015: $1.1 million), or $0.02 per share (Q4 2015: $0.01)

 Operating cash flow of $5.0 million (Q4 2015: $5.2 million), or $0.041 per share (Q4 2015: $0.04)

 Free cash flow1 of $(3.7) million (Q4 2015: $2.7 million), or $(0.03) per share (Q4 2015: $0.02)

 Production cash costs per ounce1 were $1,185 or US$888 (Q4 2015: $1,029 or US$770)

 All-in sustaining costs per ounce (“AISC”) 1 on a production basis were $1,702 or US$1,275 (Q4

2015: $1,388 or US$1,039)

Note:

1 Refer to the section entitled “Non-IFRS Performance Measures” for the reconciliation of these non-

IFRS measurements to the Financial Statements

Mr. Duncan Middlemiss, President and CEO, commented on the 2016 year-end results, “This was a

transitional year for Wesdome with many achievements and positive changes. Despite a slow start to

production, operating results improved throughout the year. The team brought higher grade stopes

into the mine plan ahead of schedule and controlled production costs, even as additional

investments were made to expand mineral reserves, re-new our capital equipment, and extend our

operating infrastructures. Work continues to increase gold production from the Eagle River

Underground Mine where our margins are highest. This, along with higher gold prices resulted in

higher operating cash flow and net income over 2015, despite lower production. Free cash flow was

lower than 2015 primarily due to increased exploration spending and reserve development. This

exploration work is necessary to determine the appropriate production profile scenario at the Eagle

River Complex.”

“Wesdome had an exceptional year for explorati on. Eagle River reserves increased 15% net of

depletion, 300 E Zone was drilled further and delinea ted, where the widths are significantly greater

than previously encountered at Eagle River. The 7 Zone was traced 200 metres up plunge towards

surface. These results set the path for diversified working places underground with the goal of

raising and stabilizing quarter to quarter produc tion. We are very exci ted by the Kiena Deep

discovery in Val d’Or, Quebec. Since announcing the discovery in August 2016, we have increased

the number of drills from 2 to 4 and results continue to deliver grades substantially higher than the

historic production grade profile at Kiena of 4.5 g/t. Step out hol es confirmed mineralization now

tested along 550 metres of strike length, indicating a potential larg e new gold system . We expect to

make a decision on underground ramp development in the short term.”

“In 2017, we expect production to increase over 2016’s levels to rang e between 52,000 – 58,000

ounces at operating costs between CAD$1,030 - $1,130 per ounce (USD$765 – $835 per ounce). We

have implemented a cost-cutting program at the Eagle River Complex which is starting to yield

results, and underground development work compl eted in 2016 has resulted in improved mine

sequencing. We have a total of eleven drills on four assets – three underground at Eagle River, two

at Mishi, four at Kiena and two at Moss Lake. Ou r asset base is strong and these are appropriate

levels of exploration in order to return value to shareholders.”

Quarter ended December 31 Year ended December 31

2016 2015 2016 2015

(in $000, except per share amounts)

Revenue1 22,166 23,622 84,031 73,465

Mine operating profit2 7,133 7,767 26,036 17,680

Net income (loss) 2,352 1,110 7,786 (4,701)

Net income adjusted2 3,047 1,977 7,988 3,186

Basic income (loss) per share 0.02 0.01 0.06 (0.04)

Basic income per share adjusted2 0.02 0.02 0.06 0.03

Cash flows from operating activities 4,976 5,153 19,927 10,055

Cash flows from operating activities

adjusted2 5,671 5,783 20,129 12,771

Free cash flow2 (3,735) 2,736 (8,437) (5,719)

Cash and cash equivalents 26,760 15,424 26,760 15,424

Working capital 15,561 12,507 15,561 12,507

Quarter ended December 31 Year ended December 31

2016 2015 2015 2015

Eagle tonnes milled 42,607 42,185 170,369 173,189

Mishi tonnes milled 30,714 33,100 138,688 132,038

Total tonnes milled 73,321 75,285 309,037 305,227

Eagle River head grade (g/t) 8.2 9.2 7.9 7.8

Mishi head grade (g/t) 1.6 2.3 2.0 2.6

Eagle River underground mill

recovery (%) 94.6 94.2 93.5 94.9

Mishi Open Pit mill recovery (%) 81.6 79.6 85.4 87.3

Eagle recovered grade (g/t) 7.7 8.7 7.4 7.4

Mishi recovered grade (g/t) 1.3 1.9 1.7 2.2

Eagle ounces produced 10,595 11,625 40,252 41,013

Mishi ounces produced 1,292 1,945 7,485 9,457

Total ounces produced 11,887 13,570 47,737 50,470

Ounces sold 13,490 16,023 48,680 49,804

Average realized price (CAD$/oz) 1,655 1,474 1,676 1,475

Average realized price (US$/oz) 1,240 1,104 1,265 1,153

Production cash costs (CAD$/oz) 1,185 1,029 1,194 1,115

Production cash costs/oz (US$/oz) 888 770 901 872

All-in-sustaining costs (CAD$/oz) 1,702 1,388 1,707 1,542

All-in-sustaining costs (US$/oz) 1,275 1,039 1,289 1,206

Average 1 USD to CAD exchange

rate 1.3344 1.3353 1.3253 1.2790

Notes:

1 Revenue for the year ended December 31, 2016 incl udes $2.4 M gold sales from the Kiena Complex

mill cleanup in Q3 2016.

2 Refer to the section entitled “Non-IFRS Performa nce Measures” for the reconciliation of these non-

IFRS measurements to the Financial Statements.

MINERAL RESERVES

Mine Categor y Tonnes Grade Contained

(g/t) Ounces

Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013

Eagle River Proven 208, 000 10.2 68,000 53,000 39,000 41,000

Probable 949,000 9.0 276,000 247,000 226,000 128,000

Proven + Probable 1,157,000 9.2 344,000 300,000 265,000 169,000

Mishi Proven 259,000 1. 8 15,000 11,000 12,000 16,000

Probable 1,361,000 2. 0 87,000 120,000 109,000 96,000

Proven + Probable 1,620,000 2.0 102,000 131,000 121,000 112,000

TOTAL 446,000 431,000 386,000 281,000

MINERAL RESOURCES (Exclusive of Reserves)

Mine Categor y Tonnes Grade Contained

(g/t) Ounces

Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013

Eagle River Inferred 327, 000 8.1 85,000 170,000 80,000 105,000

Mishi Open Pit Indicated 3,679,000 2.1 248,000 248,000 248,000 248,000

Inferred 764,000 2. 4 59,000 59,000 59,000 59,000

Mishi Underground Indicate d 567,000 4.5 82,000 82,000 82,000 82,000

Inferred 437,000 5.8 81,000 81,000 81,000 81,000

TOTAL Indicated 330,000 330,000 330,000 330,000

Inferred 225,000 310,000 220,000 245,000

EAGLE RIVER PROVEN AND PROBABLE RESERVE BREAKDOWN BY ZONE

Structure Tonnage Grade (g/t) Contained Ounces Percent (oz)

No. 8 255,000 10.6 87,000 25

No. 300

456,000 9.0 132,000 38

No. 7 310,000 9.2 91,000 27

Other 136,000 7.8 34,000 10

TOTAL 1,157,000 9.2 344,000 100

Notes to Mineral Reserves and Mineral Resources Tables:

 Mineral Reserves and Mineral Resources estimates have been made in accordance with the

Standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National

Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”).

 Numbers reflect rounding to nearest 1,000 tonnes and ounces.

 All Mineral Resources are in addition to Mineral Reserves.

 Mineral Resources are not in the current mine plan and therefore do not have demonstrated

economic viability.

 Assumed gold price of CAD$1,550 per ounce.

 All Mineral Reserves at Eagle River employ a 1.5 m minimum width, a 3.0 g/t minimum grade

for continuity and include 1.0 m of external dilution. Mineral Resources are reported in-situ with

no dilution provision.

 All Mineral Reserves at Mishi employ a 1.0 g/t cut-off grade and a 3.0 m minimum width.

Estimates provide for 10% dilution, 11% lost ore and metallurgical recoveries of 86%. Open pit

Mineral Reserves extend to an average depth of 70 m.

 Mishi Mineral Reserves currently have a life of mine stripping ratio of 2.3 tonnes of waste per

tonne of ore.

 Mishi Open Pit Mineral Resources extend to a depth of 110 m, employ a 1.0 g/t cut-off grade, a

3.0 m minimum width and are reported in-situ with no dilution or lost ore provisions.

 Mishi Underground Mineral Resources are reported in-situ employing a 3.0 g/t cut-off grade and

a 1.5 m minimum mining width.

 At Eagle River all high assays are cut to either 60 g/t or 140 g/t for individual zones. This is

based on grade-frequency histograms at 95 percentile.

 At Mishi all high drill core assays are cut to 45 g/t. All high blasthole assays are cut to 25 g/t.

These are based on where a ragged tail on grade-frequency histograms commence.

 A density or tonnage factor of 2.7 tonnes per cubic metre is applied at Eagle River and 2.8 at

Mishi.

TECHNICAL DISCLOSURE

The technical and scientific disclosure in this press release has been prepared and approved by

George Mannard, P. Geo., Vice President, Exploration and Philip Ng, Chief Operating Officer of

Wesdome and “Qualified Person” as defined by National Instrument 43-101 disclosure standards.

CONFERENCE CALL DETAILS:

Wesdome will be hosting a call to discuss these results at 9am ET on February 23, 2017. Participants

are invited to join using the following information:

Wesdome Gold Mines 2016 Fourth Quarter and Full Year Financial Results Conference Call:

North American Toll Free: +1 (844) 202-7109

International Dial-In Number: +1 (703) 639-1272

Passcode: 73151421

Webcast link: http://edge.media-server.com/m/p/959b3kdf

Webcast can also be accessed under the News and Events section of the Company’s website

(www.wesdome.com)

ABOUT WESDOME

Wesdome Gold Mines is in its 29 th year of continuous gold mining operations in Canada. The

Company is 100% Canadian focused with a pipeline of projects in various stages of development.

The Eagle River Complex in Wawa, Ontario is curre ntly producing gold from two mines, the Eagle

River Underground Mine and the Mishi Open pit, from a central mill. Wesdome is actively exploring

its brownfields asset, the Kiena Complex in Va l d’Or, Quebec. The Kiena Complex is a fully

permitted former mine with a 930 metre shaft and 2,000 tonne per day mill. The Company has

further upside at its Moss Lake gold deposit, loca ted 100 kilometres west of Thunder Bay, Ontario,

which is being explored and evaluated to be developed in the appropriate gold price environment.

The Company has approximately 130 million shar es issued and outstanding and trades on the

Toronto Stock Exchange under the symbol “WDO.”

For further information, please contact:

Duncan Middlemiss or Lindsay Carpenter Dunlop

President and CEO VP Investor Relations

416-360-3743 ext. 29 416-360-3743 ext. 25

[email protected] [email protected]

8 King St. East, Suite 811

Toronto, ON, M5C 1B5

Toll Free: 1-866-4-WDO-TSX

Phone: 416-360-3743, Fax: 416-360-7620

Website: www.wesdome.com

This news release contains “forward-looking information” which may include, but is not limited to, statements with respect to t he future financial or operating

performance of the Company and its projects. Often, but not always , forward-looking statements can be identified by the use of words such as “plans”,

“expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations)

of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-

looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, perform ance or achievements of the

Company to be materially different from any future results, perf ormance or achievements expressed or implied by the forward-loo king statements. Forward-

looking statements contained herein are made as of the date of this press release and the Company disclaims any obligation to u pdate any forward-looking

statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forwa rd-looking statements will prove

to be accurate, as actual results and futu re events could differ materially from th ose anticipated in such statements. The Comp any undertakes no obligation to

update forward-looking statements if circumstances, management’s estimates or opinions should change, except as required by securities legislation. Accordingly,

the reader is cautioned not to place undue reliance on forward-l ooking statements. The Company has included in this news releas e certain non-IFRS

performance measures, including, but not limited to, mine operat ing profit, mining and processing costs and cash costs. Cash costs per ounce reflect actual mine

operating costs incurred during the fiscal period divided by the number of ounces produced. These measures are not defined und er IFRS and therefore should

not be considered in isolation or as an alternative to or more meaningful than, net income (loss) or cash flow from operating a ctivities as determined in

accordance with IFRS as an indicator of our financial performa nce or liquidity. The Company believes that, in addition to conventional measures prepared in

accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow

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